In uncertain times, the company’s bottom card for growth

  During the outbreak of the new crown pneumonia epidemic in 2020, we have seen the growth cornerstones of many companies so vulnerable. Kenichi Ohmae, the father of Japanese strategy consulting, said that the capabilities of a company are reflected in “hedging risks against the invisible future” and “planning for the visible future.” Indeed, in this epidemic, we have seen a number of companies that have deployed digitalization in advance to grow against the trend. For example, the perfect diary, which has been in business for three years and focused on digital customer operations, has become a dark horse for new domestic beauty makeup. In contrast, most traditional beauty brands in the past 20 years have focused their growth on the construction of retail channels. Today, when the black swan event of the epidemic broke out, they did not possess the “anti-fragility” proposed by Nicholas Taleb. ——The ultimate self-conservation rule for black swan events that may occur at any time.

  Therefore, good growth should not only stop at the macro strategy and vision, but more importantly, form an effective and inevitable structure from the micro level, see the certainty in the uncertainty, and make the strategy “disassembled and settled.” “, so that marketing “can go up and open up.” This is the growth structure.
  The so-called growth structure refers to the inevitable solution to the growth trend formed by the combination of micro-factors in the growth of a company’s business. The mission and vision mentioned in the strategic plan are certainly good, but how to turn these macro visions and passions into dynamic algorithms is a problem faced by many entrepreneurs.
  Systems and theories are practical only when they are cut into and developed around problems. This is also the “art” of management that Mintzberg said. The anatomy of growth centered on “structure” can be divided into seven sub-structures.
Business structure

  The first substructure is the “five lines of growth”, that is, the “business structure”. It extremely rationally reflects the company’s business-level growth design, including retreatability, growth bottom line, growth line, explosion line and skyline. It The core is to dissect how to make the best combination of enterprise business. From this perspective, we can see the “offensive and defensive approach” of a company in its business layout.
  For example, Huawei’s design of the retreat line in 2020-to sell glory at a price of 100 billion yuan, is not only to survive with a broken arm, but also a rational judgment of the business structure under the growth strategy. In the short-term irreversible situation of non-favorable conditions in the external market, Huawei’s divestiture of Honor, on the one hand, allows Honor to be exempt from the restrictions of the US ban, and on the other hand, it can obtain huge cash flow to support Huawei’s future chip research. It is worth mentioning that this is not the first time that Huawei has deployed a retreat line. In the early years, Huawei Electric and Huawei Marine were also sold to Emerson and Hengtong Optoelectronics respectively. In a sense, Huawei’s design of these retreat lines is also consolidating its own bottom-line business. Huawei’s current business can be divided into four major areas-operator business, enterprise business, consumer business, and cloud services. These four business areas form Huawei’s growth line, and they are coordinated and developed together to form Huawei’s ecological strategy. Layout the territory to find the business explosion line and breakthrough business skyline.
Customer structure

  There must be customers behind all growth, otherwise the design of growth will become a source of water and a tree without roots. This is also the crux of many companies seeking growth but unable to grow-they did not base their growth design on a solid customer base, so these growth designs became aggressive diversification. Therefore, the second substructure is the “customer structure.” Behind the expansion of the company, there must be customer needs and customer assets as support. It includes customer needs, customer portfolio and customer assets. Customer structure refers to how to effectively combine the above three elements. , So as to provide enterprises with growth potential.
  This is the foundation for companies such as Tencent, Alibaba, and Bytedance to achieve exponential development. Tencent started from the instant messaging software OICQ, and has grown to have more than one billion users today. Behind its rapid development is a growth path based on customer assets as the core-with QQ accounts as the core, expansion to peripheral products, including QQ Space, games, advertising, etc., have finally achieved today’s social business empire with WeChat as the core.
  Tencent’s massive customer resources not only support its own rapid development, but also empower its partners. The development of Pinduoduo is a typical example. The design of the customer structure can test the effectiveness of growth-whether it is based on customer needs, whether the customer mix is ​​reasonable, and whether customer resources are properly activated.
Competitive structure

  When we focus on the customer structure, of course we will face competition and compete with competitors for the same customer group. This requires us to shift our focus to the third sub-structure-the “competitive structure”, that is, from science and technology. Teller’s vision transitioned to the essence of Michael Porter’s theory.

  Superior competitiveness can help companies stabilize their customer source and profit area, and effective profits can support the company’s steady growth. Lack of competitiveness makes it easy for companies to fall into a vicious circle—continuously serving customers, but they have little profit in the competition. For example, a certain insurance finance company sells aviation accident insurance through Ctrip, but its profit is almost zero. Because in the entire competitive structure, the company has no pricing power. Here, our definition of the competitive structure is “how to limitedly establish its own pricing power and barrier height in the industry ecology”.
  Once the company’s business forms barriers in a certain sense, such as high entry barriers for competitors and high exit barriers for customers, the business will naturally form a positive cycle in the process of serving customers. This is also what Buffett calls “snowballing”—— The growth of an enterprise at this level is like a “very long slope” and “very wet snow” when you roll a snowball. The snowball rolls down from the slope and gets bigger and bigger. Under the new crown pneumonia epidemic in 2020, Moutai’s market value has grown against the trend, reaching 2 trillion yuan, which is closely related to the competition barriers formed by its brand, so the competition structure can also point to growth.

Differentiated structure

  In the process of designing growth in a competitive way, many companies may not be able to establish barriers in the short term. In this case, how should companies deploy? This makes the next growth sub-structure-“differentiated structure” inevitably proposed.
  Differentiation has always been the core of marketing and strategy. Here, the “differentiated structure” refers to the effective combination of differentiating factors that drive the growth of the enterprise’s market to form a growth engine different from competitors. It includes resource differentiation and model Differentiation and differentiation of cognition.
  For example, Yuanqi Forest is a model of success through cognitive differentiation strategy. Yuanqi Forest’s revenue in 2020 is close to 3 billion yuan, creating a miracle of growth against the trend during the epidemic. Yuanqi Forest’s main product soda sparkling water replaces the traditional sugar substitutes such as aspartame and acesulfame potassium with erythritol, which improves the taste under the premise of health, which has captured the current health drink popularity Consumers’ demand for “zero sucrose, zero fat, and zero card” in the trend has succeeded in one fell swoop.

Asymmetric structure

  In the competition, there will also be a group of ambitious entrepreneurs who are differentiated but do not avoid industry leaders and other opponents, and are brave enough to attack the barriers of their opponents. They can enter another growth substructure-“asymmetric structure”. “. The asymmetric structure is to look for the inevitable weak points in the competitive advantage of competitors, make a hole in it, and realize the curve-overtaking growth in a specific market segment.
  In 2003, eBay made a global siege and entered the Chinese market at the same time, but Taobao eventually defeated eBay because Jack Ma saw a point of attack on eBay. At that time, eBay’s model was to collect booth fees from merchants who entered the market and commission in the transaction between the two parties. Taobao went the other way and announced the implementation of a three-year free strategy, that is, not charging merchants for service fees within three years and quickly acquiring customers , Making the merchants who originally entered eBay quickly turned to Taobao. The dilemma of eBay at the time was that once it followed up on Taobao’s play and gave merchants in the transaction free of charge, eBay’s revenue would drop sharply, affecting its market value in the capital market, which was a greater loss for eBay at that time. It is also a result that it does not want to see. The essence of the asymmetric structure is that when you attack, industry leaders cannot or are difficult to fight back.
Cooperation structure

  Of course, business is different from war, and profitable growth is especially critical. Otherwise, it will be the dead end of Kodak—becoming an industry leader, but being thrown out of the market by disruptive forces. Therefore, there is not only “competition” in competition, but also “cooperation”-cooperation. This has to talk about a problem that cannot be avoided in today’s digital ecosystem-how to design the “cooperative structure”. Cooperative structure refers to the circumstances under which companies should seek growth in a cooperative manner during competition.
  In the general trend of shifting from the PC Internet to the mobile Internet, Microsoft failed to change in time, and was successively surpassed by rivals Google and Apple. After taking office, Satya Nadella, the third CEO of Microsoft, embarked on the transformation of Microsoft to the cloud ecosystem, and put forward the strategic concept of “empowering everyone and every organization in the world to achieve extraordinary achievements”. Microsoft no longer bundles Windows and Office, but opens Office as an open source software to other systems, and at the same time launches Office 365 cloud service. In less than a year, the number of active corporate users of Office exceeded 120 million. Relying on the successful cloud ecological transformation, Microsoft’s market value exceeded $1 trillion in early 2019, replacing Apple and returning to the position of the world’s most listed company.
Value structure

  The last structure will become the ultimate criterion for growth—whether it is valuable, such as customer value, company value, market value, etc. This is the “value structure.” The reason for using this as a substructure is that value can be used as an explicit criterion for judging whether growth is effective. “Value structure” refers to the value hierarchy that drives the company’s growth, including customer value, financial value, and company value.
  Musk, Tesla’s helm, is a master at designing value structures. Tesla precisely aims at the customer value needs of the target customer group, and has designed a travel tool that represents the future trend-new energy electric vehicles for the high-net-worth people with strong payment ability, who love technology, love fashion, and pay attention to environmental protection. The ultimate “technology, cool and environmental protection”. Tesla also pays attention to the creation of customer lifetime value, providing customers with free charging, free lifetime upgrades, and 8-year battery protection services. While meeting customer needs, it further enhances customer loyalty to the brand and the possibility of repurchase sex. At the same time, Tesla also pays attention to the company’s performance in the financial and capital markets. After turning losses into profits in 2018, it has actively deployed overseas markets, such as building super factories in Shanghai, China and Berlin, Germany, so that the entire capital market has a better future. The development space has a broader imagination.
  From customer value to financial value, the final feedback on market value is that Tesla has become the stock with the largest increase in the Nasdaq Composite Index in 2020. In December 2020, its market value has exceeded US$500 billion, which is higher than that of Volkswagen. The total market value of the three major auto plants, Honda, Honda, and General Motors is still high. Although whether Tesla’s market value is too high is still controversial, it is undeniable that its value creation model has a hard core driving force for the company’s growth.
  These seven sub-structures form a closed loop, like a game of chess. It focuses on the formation of the growth strategy and tries to touch the essence behind the growth strategy.

error: Content is protected !!